REGRESA

1. Financial market believes cuts in the Selic rate are far due to 2026 elections

The Brazilian financial market has been adjusting its expectations for a cut in the Selic interest rate, with an increasingly uncertain electoral scenario and fiscal policy emerging as key factors. Although the Central Bank is keeping the Selic at 15% per year, political stress and the need for fiscal space to accommodate additional spending have led investors to anticipate that the start of the interest rate cutting cycle may be postponed to 2026, possibly beyond March.

This caution reflects the perception that the domestic environment, combined with external uncertainty and inflation still above the midpoint of the target range, will limit the Central Bank’s ability to ease monetary policy in the short term, keeping interest rates elevated for longer to consolidate price control.

Valor Econômico: Mercado vê corte na Selic mais distante sob estresse eleitoral

2. Senate approves tax reform bill that raises taxes on betting companies and fintechs

The Brazilian Senate has approved a bill aimed at restructuring the national tax burden, marked by the reduction of tax incentives across several sectors and by higher taxation on sports betting companies and fintechs. This measure is part of the government’s strategy to strengthen public revenues and balance fiscal accounts.

The proposal, which now awaits presidential approval, seeks to review and eliminate certain tax exemptions, as well as to introduce new tax rates, particularly for digital financial services and gambling activities. Legislative debate focused on the impacts on the competitiveness of the affected sectors and on projected additional revenue, signaling a move toward greater modernization and equity in the country’s tax system.

Estadão: Senado aprova redução de benefícios fiscais e maior tributação de bets e fintechs; veja o que muda

3. Macron reiterates France’s opposition to the EU-Mercosur trade agreement

French President Emmanuel Macron has publicly reaffirmed that France will not support the ratification of the trade agreement between the European Union and Mercosur. Macron’s position reflects his government’s ongoing concerns, particularly regarding environmental standards, deforestation, and the potential impacts on French agriculture, which fears unfair competition from South American products.

The statement highlights the significant obstacles the long-negotiated pact still faces, despite efforts by both blocs to address the contentious issues. This continued stance from a key EU member continues to hinder progress on the agreement, indicating that a resolution remains distant without substantial guarantees, especially on sustainability and agricultural protection.

Folha de S.Paulo: Macron reafirma que França não apoiará acordo entre UE e Mercosul

4. Central Bank raises Brazil’s GDP growth forecast to 2.3%

The Central Bank of Brazil has revised upward its forecast for the country’s Gross Domestic Product (GDP), now estimating growth of 2.3% for the current year. This more optimistic outlook is mainly attributed to the strong performance of the agribusiness sector, which has provided a significant boost to the national economy.

The robust results in agriculture, supported by good harvests and favorable commodity prices, are seen as an effective counterbalance to the slower pace observed in other areas of the economy. The new forecast suggests a more resilient economic scenario than previously anticipated, sending a positive signal to investors and policymakers, while other economic variables continue to be closely monitored.

Exame: BC eleva projeção de crescimento do PIB para 2,3% com impulso do agro

5. Industrial activity declines, reflecting economic slowdown

Brazilian industrial activity fell by 7.1 points in November, according to data from the National Confederation of Industry (CNI), reinforcing the economic slowdown already seen in industrial production, which increased by just 0.1% in October. This sharp decline signals a loss of momentum in the sector, affected by the combination of high interest rates (Selic at 15%) and uncertainty in the global environment.

Despite growth driven by extractive industries, the sector as a whole remains far from its historical peaks. Experts note that industrial stagnation is a direct reflection of an economy expected to grow more slowly in 2025, with restrictive monetary policy continuing to curb investment and overall economic activity.

Metrópoles: Atividade industrial recua 7 pontos em novembro, aponta CNI
CNN Brasil: CNI: Atividade industrial cai 7,1 pontos em novembro